The Nation Newspaper

Category: Industry

  • How Enelamah can reposition real sector

    How Enelamah can reposition real sector

    Minister of Industry, Trade and Investment Dr Okechukwu Enyinna Elelamah has a major task-to revive the moribund real sector, whose contribution to the Gross Domestic Product (GDP) stands at a meagre 9.5 per cent. Is he up to the task? Operators and experts point the way forward. CHIKODI OKEREOCHA reports.

    The task before the Minister of Industry, Trade and Investment, Dr Okechukwu Enyinna Enelamah, is enormous. He came at a time the real sector is the focus of the Federal Government’s strategic rethink in favour of weaning the economy of its age-long over-dependence on  oil revenue. This means that the responsibility of driving the diversification agenda rests on him.

    Lagos Chamber of Commerce and Industry (LCCI) Director-General Mr. Muda Yusuf said the minister’s success would depend on the support he gets from other ministries and agencies to complement his efforts through appropriate policies and infrastructure.

    “If the country does not have the right infrastructure and policies, he cannot succeed in his portfolio,” Yusuf told The Nation.

    Describing the minister as “a good material,” he said the bulk of his work should be advocacy so that other agencies would collaborate with him in the task of repositioning the real sector, especially manufacturing, to play its role as a catalyst of economic development through the provision of basic infrastructure.

    “He can only succeed to the extent that other ministries complement him to drive the real sector,” Yusuf emphasised.

    Manufacturers Association of Nigeria (MAN) president Dr. Frank Udemba Jacobs said Enelamah must concentrate on improving on the nation’s poor infrastructure such as electricity, roads and railway among others. According to him, the dearth of infrastructure especially poor electricity supply is responsible for the rising cost of production, which in turn lowers manufacturers’ productivity and competitiveness. It is also responsible for the high mortality rate of manufacturing firms in the country.

    Jacobs, who spoke with The Nation on the sideline of the 48th Annual General Meeting (AGM) of MAN, Ikeja branch, held in Lagos, last week, noted that without infrastructure, locally manufactured products won’t sell beyond the country’s shores. Pointing out that the manufacturing sector, more than any other, has the greatest capacity to create wealth, generate employment and facilitate skill acquisition, he said: “All obstacles to its sustainable growth and development should be removed in order to achieve its full potential.”

    He also said the minister must address fiscal and monetary policies that have worked against the manufacturing sector. Although he described Enelamah’s emergence as industry minister as “a welcome development”, Jacobs pointed out that one of the policies the minister must address is the Central Bank of Nigeria (CBN) Foreign Exchange (forex), which prohibits importers from accessing its forex window for 41 items that can be sourced locally.

    Jacobs lamented that under the forex restriction policy, which has thrown manufacturers into confusion, some essential raw materials that are not available locally were lumped together with finished products. He argued that only imported finished items should have been on the list for the policy to be truly beneficial to the manufacturing sector and the economy generally.

    Noting that the challenge of inadequate forex and CBN’s new forex guidelines, to a large extent, negatively affected manufacturers and increased the cost of production, Jacobs raised the alarm that if not addressed , the policy could result in factory closures and loss of jobs.

    Indeed, the picture of the real sector Enelamah inherited is everything but inspiring. For instance, over the last decade, the manufacturing sector’s contribution to the nation’s Gross Domestic Product (GDP) stood at an average of four per cent. Although, there was a significant increase in the sector’s contribution to GDP to 9.2 per cent in 2013 following the rebasing exercise, before it peaked at its current 9.5 per cent, the figure is still considered a drop in the ocean.

    For instance, while Nigeria’s real sector contribution to GDP is 9.5 per cent, those of US and China stand at 35.6 per cent and 49.5 per cent, respectively, according to the Chairman, Economic Policy Committee (EPC) of (MAN), Reginald Ike Odiah. He said Japan, India and Germany also parade 38.2 per cent, 38.4 per cent and 35.9 per cent real sector contribution to GDP.

    Odiah, who made this known at the 48th AGM of MAN Ikeja branch, expressed regrets that, despite priding itself as Africa’s biggest economy following the recent re-basing of the economy, Nigeria has been unable to ensure the support and development of her real sector to grow her economy the same way other countries with large populations like hers such as China, India, Indonesia and Brazil did.

    In a paper he presented at the AGM titled:“Serious Constraints to Sustainability of the Real Sector (From a Manufacturer’s Perspective)”, Odia, who is also Managing Director of Bennett Industries Ltd., said when adequately developed, the benefits derivable from the real sector, which includes agriculture and manufacturing are huge. According to him, the sectors have enormous backward and forward linkages with other sectors of the economy.

    Indeed, Odiah and other experts believe that the real sector holds better prospects of galvanising the economic. According to them, the sector is more inclusive and sustainable, growth-oriented and also characterised by high economic linkages.“The real sector of any economy is the engine of growth. The need to ensure a healthy and strong real sector therefore, cannot be over emphasised’’, Odiah pointed out.

    The need for a  robust real sector has become more compelling now that oil prices are plunging, compelling the Federal Government to shift focus to the sector in the hope of reversing the trend where oil revenue accounts for more than 75 per cent of government’s revenue and close to 90 per cent of foreign exchange income. For real sector operators, this is the most auspicious time to unlock the massive potential in the manufacturing sector and increase its productivity through result-driven policies.

    One of the major steps is for the minister to work with relevant ministries and agencies to close the huge infrastructure gap, particularly power that has been a thorn in the flesh of manufacturers. The consensus is that the power sector reforms embarked upon by the immediate past administration failed to offer manufacturers the needed succour. The crisis in the energy sector has refused to abate. The power sector privatisation has not seen any significant improvement in electricity supply to residential and industrial consumers.

    “A situation where manufacturers spend a whopping N500 billion annually on in-house power plants along with other added costs of providing other infrastructural deficiencies certainly is out of the equation,” Odiah lamented, noting that apart from basic infrastructure, other major components the minister must focus on, working with other relevant ministries and agencies, include good governance, financial reforms, security and corruption.

    He said, for instance, that a good government must constantly look inwards with a view to encouraging consumption of locally made goods. “This is the first step to developing a strong real sector. A strong internal market for locally-made goods will create employment, reduce crime and bring prosperity to the people,” Odiah pointed out.

    In recent time, unemployment rate has assumed a scary dimension and is believed to be contributing largely to the insecurity that pervades the nation. Investors’ confidence has also drooped. Most local and foreign investors are said to be holding back, waiting to see a significant improvement in security of life and investments.

    Although these issues present significant challenges to the new minister, industrialists and members of the Organised Private Sector (OPS) say he has no reason to fear if only he could pay closer attention to the challenges facing the real sector. Some of them who spoke with The Nation said in doing so, the minister must give room for robust consultations with private sector bodies for input into policy formulation processes and a universal application to all investors in a given sector.

    For economist and Managing Director of Cocosheen Nigeria Limited, Mr. Henry Boyo, respecting the sanctity of monetary stability would help reposition the real sector. “The pillar of any economy is monetary policy and the pillar of monetary policy is interest rate, inflation and exchange rate. When you get those ones right like in other countries you will fix the sector and the economy generally,” he declared.

    Delivering a paper titled: “Future Growth and Capacity Utilisation of Nigeria’s Manufacturing Sector in the Context of New Economic Realities and Tariff Policy Constraints” at a 44th AGM of Apapa branch of MAN, Boyo said: “high interest rate makes it impossible for the real sector to grow”. According to him, there is need to stem the crisis of excess liquidity in the system, which is responsible for the high interest rates, inflationary pressure, and devaluation of the naira.

    According to him, excess liquidity in the system is caused by Central Bank of Nigeria (CBN) “crazy, merciless, insensitive, and unilateral policy” of substituting naira allocations for dollar-derived revenue. He said CBN’s conscious, deliberate and misguided payment arrangements result in market imbalance, which ultimately weakens the naira exchange rate.

    Can Enelamah ride the storm? Only time will tell. But going by his intimidating resume, operators and stakeholders are hopeful that the Abia State-born medical doctor, chartered accountant and chartered financial analyst would deliver.

  • Nigeria, Japan bilateral trade hits $528b

    Nigeria, Japan bilateral trade hits $528b

    Trade volume between Japan and Nigeria has reached a record $5.28 billion, the Trade Commissioner and Managing Director, Japan External Trade Organisation (JETRO), Mr. Taku Miyazaki, has said. He said Japanese companies were keen on expanding their businesses in the country with high technology.

    Miyazaki urged the government to make the environment conducive for Japanese companies to operate. He said some of the draw backs that may deter would-be investors from his country are poor infrastructure such as electricity as many of the prospective investors are manufacturers who are also desirous of good roads, good regulatory environment, efficient judicial system, attractive import regulatory environment and security of lives and investment.

    “Nigeria ordinarily should be the toast of investors if the necessary things are put in place especially in terms of effective and efficient infrastructure provision such as electricity, motorable roads, effective and consistent regulatory authorities, and standardization that will discourage the importation of fake and cheap products from other Asian countries,” he said.

    He said last year, both import from Japan to Nigeria and export from Nigeria to Japan increased significantly. According to him, import from Japan mainly consisted of machinery, steel products and vehicles valued at about $728 million, representing 21.0 per cent more than 2013 figure.

    On the other hand, export from Nigeria to Japan, which was dominated by natural gas and a few non-oil products especially sesame seeds, also increased 36.8 per cent to nearly $4.5 billion last year. He said JETRO has committed 60 years of its life to Nigeria to strengthening bilateral economic relationship between the two nations.

    Miyazaki said Japanese companies in Nigeria are known for their high quality products and are attracted to the country by her population, which is in the excess of 170 million as well as her large market.

    He identified some of the Japanese companies operating in Nigeria to include Nissan, a giant car manufacturer with a manufacturing plant that took off last year; Honda, which started in July local assembling but with a history of over 20 years presence in Nigeria, and Isuzu that recently announced plans for local manufacturing by second quarter of next year.

    The Trade Commissioner said the interest of his home government is much elucidated with the large presence of companies in the recently concluded Lagos International Trade Fair where the Japanese Pavilion featured 24 companies that included participants from Japan as well as their local representative agents in fields such as food, vehicles, transportation, machinery, motorcycles, and auto parts, and stationary including home appliances.

    Others are musical instruments, power generators, security devices, industrial equipment, electrical tools, office equipment and sewing machines. He stated that an increasing number of Japanese companies are keen to expand their businesses in Nigeria, he said.

    On how Japanese companies intend to help Nigeria tackle the problem of counterfeiting, he said the Japanese Government has taken the advocacy campaign to the Chinese Government and have subsequently organised seminars, conferences and workshops in the bid to curb the faking of Japanese brands in China, for instance.

  • Akande to take over as NEPAD’s chair

    Akande to take over as NEPAD’s chair

    Former Minister of Industry Dr.  Nike Akande will take over as chairman of the New Partnership for Africa’s Development (NEPAD) Business Group Nigeria (NBGN) at the  organisation’s third Annual General Meeting (AGM) slated for Tuesday in Lagos. She will take over from Chief Chris Ezeh.

    Akande, a two-time Minister of Industry, is a seasoned industrialist and a believer in a strong and virile private sector as the engine and catalyst of economic growth. She is a founding member and a Director Board Member of the group, as well as a foundation member of the Nigeria Economic Summit Group (NESG) and member of the African Business Roundtable (ABR).

    Akande is a director, PZ Cussons Foundation; Board Member, Bank Directors Association of Nigeria (BDAN); Chairman, Entrepreneurial Studies (AES) Excellence Club; Deputy President of the Lagos Chamber of Commerce and Industry (LCCI); Honorary Life Vice-President, National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), and President, Pan-African Organisation for Women Recognition.

  • Lagos: Leveraging on SMEs for growth

    Lagos: Leveraging on SMEs for growth

    Dwindling oil revenue has since forced a rethink in strategy in favour of Small and Medium Enterprises (SMEs). The Lagos State government is blazing the trail through deliberate policies and special programmes aimed at galvanising SMEs and engendering the development of the non-oil sector. Assistant Editor OKWY IROEGBU-CHIKEZIE reports that this is in the hope of boosting industrialisation.

    The capacity of Small and Medium Enterprises (SMEs) to serve as the engine of economic growth and development is not lost on the Lagos State government. With the growing emphasis on diversifying the economy, following the crisis in the international oil market where the price of Nigeria’s crude oil has been falling, Governor Akinwunmi Ambode’s administration has turned to SMEs for succour.

    Specifically, the state is encouraging SMEs through deliberate polices, special programmes and projects, in collaboration with relevant agencies, in the hope of generating employment, creating wealth, and boosting industrialisation. The administration is looking inwards and initiating policies and programmes targeted at engendering the development of the non-oil sectors where SMEs are dominant players.

    For instance, at a mini-trade fair of locally-produced goods, organised by the Lagos State government, last week, to commemorate the ‘African Industrialisation Day,’ Ambode said the policy thrust of his administration embraces the private sector as a key stakeholder and prime mover of the economy.

    “In the light of this, the provision of promotional tools that encourage the establishment and growth of businesses remains one of the major priorities of this administration. The Lagos State Traffic Management Authority (LASTMA) is repositioned towards ensuring the free flow of traffic across the state, while all agencies of government have been mandated to provide prompt services to the members of the public,” Ambode said.

    He assured that his administration would continue to formulate and implement policies and programmes that would consolidate the state’s position as the industrial and commercial hub of Nigeria, with the objective of creating employment, eradicating poverty and promoting sustainable economic development.

    Ambode, who was represented by the Commissioner for Commerce, Industry and Cooperatives, Prince Rotimi Adebolade Ogunleye, said Lagos was the most industrialised state in the country, accounting for about 80 per cent of the value added growth in the manufacturing sector.

    Apart from generating about 65 per cent of value added tax (VAT), with over 2000 industries, which constitute 65 per cent of the country’s total number of industries, he said Lagos was home to over 200 well capitalised and efficiently managed banking and financial institutions.

    This is in addition to accounting for nearly 60 per cent of the country’s Gross Domestic Product (GDP) and 65 per cent of national invest-ment with over 200 firms listed on the Nigeria Stock Exchange and 90 per cent of maritime foreign trade.

    Despite these intimidating credentials, Ambode said the administration was not unmindful of the challenges encountered by SMEs and other businesses in the state. He said government would continue to engage members of the Organised Private Sector (OPS) through various fora to addressing the challenges.

    Noting, for instance, that concerted efforts are being made to resolve various community-related issues between host communities and investors, he said the state government has created a number of incentives, including creating a one-stop shop of competitive infrastructure.

    He pointed out, for instance, that a number of investors have begun business operations in the Lekki Free Trade Zone. Notable among them is the Dangote Group, which, he said, is establishing a world-class refinery and fertiliser plant.

    Permanent Secretary, Ministry of Commerce, Industry and Cooperatives, Mr. Olalekan Abisoye Akodu, praised the state government for being responsive to the needs and challenges of members of the OPS, especially SME operators.

    He assured that the government was prepared to continue to offer windows of opportunity through policies, programmes and regular forum for interaction. He said this was in a bid to create a conducive investment environment for businesses to thrive.

    President, Doublem Enterprise Development Centre, Alhaji Muhammed Mustafa, said the growth of the economy could only be stimulated by deliberate policies targeted at  SMEs. He canvassed a collaboration between government and industrialists on incentives.

    According to him, this is one of the ways the ‘Asian Tigers’ achieved success; in addition to closing their borders to imported products and unhealthy competition against their local entrepreneurs.

    He said Nigeria should borrow a leaf from India, for instance, which, in 1972, came up with a policy that mandated banks to give business loans at four per cent for between four and 10 years moratorium,.

    Mustafa decried a situation where multinationals produce water, chin–chin, noodles and bread that should have been the exclusive reserve of local entrepreneurs. He regretted that this could only happen in Nigeria.

    He wondered how local companies can compete with multinationals if they are not given a leeway through deliberate policies of government. He  also wondered how indigenous entrepreneurs and SMEs can ever grow and serve as the engine of employment generation and wealth creation when the government is not in any way encouraging them.

    Decrying the high cost of funds, poor infrastructure provision, over regulation and unfair competition, Mustafa said: “Government is not sensitive to the needs of SMEs; state governments should have their plans for SMEs and not necessarily wait for the Federal Government.”

    He pointed out that small businesses are, indeed, the safest for banks to deal with because they can easily be reached unlike the multinationals where ownership is separated from management. “Government at all strata should be interested in giving them  loans  because if they succeed, they will pay taxes and they also have the capacity to employ more people, create wealth and eliminate poverty,” he added.

    An entrepreneur and Managing Director of Goshen Multi Nigeria Limited Mr. Segun Kuti-George, however, tasked government on the establishment of petrochemical industries.

    Kuti-George whose company manufactures kitchen tops, bath tubs, bowls, shower trays, and bank counters, among others, said his products have 75 per cent local material content, pleading with thegovernment to set up petrochemical industries.

    He regretted that Nigeria remained the only oil producing country in the world without petrochemical industries that manufacture resin, which is a major by-product of the petroleum industry.

    For the Managing Director, Vetinal Continental Products Ltd., Mrs. Victoria  Okonkwo, there is the need for government to support SMEs, which, according to her, are the only viable vehicle to curb unemployment.

    She expressed regrets that, despite the potential of SMEs to create wealth and generate employment, the much- touted N220 billion MSME Fund has not been disbursed because of stringent rules by banks.

    She said small companies, such as hers, could not meet stiff conditionalities, such as certificate of occupancy (C-of-O) for properties, which they usually don’t have. She said the machines and equipment of SMEs can be pledged for loans.

    Okonkwo also decried the huge cost operators incur due to poor infrastructure, especially electricity supply, which adds to their cost of production and is passed to the consumer.

  • ‘Locally-made tiles better than imported ones’

    ‘Locally-made tiles better than imported ones’

    Despite Nigerians’ penchant for foreign products, most locally-made products, particularly tiles, have proven to be of better quality than the foreign brands, the Chief Executive Officer, Nispo Porcelain Limited, manufacturers of floor tiles, Chief Afam Mallinson Ukatu, has said.

    While Nigerians’ preference for foreign goods is based on mindset and negative mentality, whereby foreign goods are looked at and perceived as superior to locally manufactured goods/brands, he said such mindset was gradually changing in favour of local brands because of their superior quality.

    Speaking to The Nation, in Lagos, Ukatu said Nispo has been rolling out quality, cost-effective tiles from its state-of-the-art ceramic and porcelain plant in Igbesa, Agbara industrial area of Ogun State, to meet the needs of the building and construction industry for wall and floor tiles.

    He stated that apart from its stronger quality, Nispo brand of wall and floor tiles has been riding on the strength of its very low water absorption rate and affordable price compared to other local brands to remain competitive in the market. This, he said, is despite that some importers have continued to flood the market with low quality brands.

    Ukatu, however, lamented that the unbridled importation of low quality tiles has negatively affected the patronage of local brands of superior quality. This, according him, has resulted in lower sales for manufacturers.

    Yet, the challenge of uncontrolled influx of imported tiles is not the only pain in the neck of Ukatu and other industrialists who manufacture tiles. He said inadequate support infrastructure for manufacturing, particularly steady electricity supply, has continued to rob off negatively on sales volume.

    “Forty-three per cent of our factory overhead cost is energy. Regardless of this, steady supply is not guaranteed due to the unholy activities of pipeline vandals, hence abrupt power outages and the long wait for repairs and commencement of operations,” Ukatu lamented, noting that persisthe tent devaluation of the naira has increased energy cost.

    He wondered why gas, believed to be the cheapest source of energy that supports manufacturers in Nigeria, is priced in dollar, insisting that government should subsidise gas for manufacturers.

    He said good road network and access to affordable loans should be made available to manufacturers, while government ensures stable and sustainable economic policies as well as discouraging importation of some items local manufacturers can produce.

  • ‘Dangote’s global expansion conforms to ECOWAS, WTO pacts’

    ‘Dangote’s global expansion conforms to ECOWAS, WTO pacts’

    The massive business expansion of the Dangote Group across Africa and around the world is in conformity to the extant agreements among Economic Community of West African States (ECOWAS) member-states and members of the World Trade Organisation (WTO).

    This was the submission of an expert in international trade and immediate past Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Dr. John Isemede.

    He spoke to reporters in Abuja, last weekend.

    Dr Isemede, who is a consultant with the United Nations Industrial Development Organisation (UNIDO), expressed satisfaction that the Dangote Group has been complying with relevant laws of doing business in Africa.

    He said the ECOWAS Trade Liberalisation Scheme (ETLS) was drawn by member- states to eliminate barriers to businesses in the region.

    The NACCIMA chief, who had worked in Ghana, said the country could not meet 30 per cent of its cement need until Dangote established a cement factory there.

    He said: “Not only that, the company has been creating jobs, doing lots of charity works through its Dangote Foundation in Ghana and elsewhere, as well as contributing to the growth of African economy.”

    Noting that there are many Ghanaian products in the Nigerian market, Isemede, who is also a member of the Federation of West African Chambers of Commerce and Industry, added that the two countries have a very cordial political and economic relationship.

    The ETLS of which African countries are signatories is aimed at gradually creating a customs union among member states through the establishment of a free trade zone and the adoption of a common external tariff.

    Isemede urged Nigerians to form business association in any country they find themselves, stating that this will help protect them against undue attacks from citizens of host countries. He said globalisation is reducing boarders to mere bus stops, urging Africans to work together in line with the collective agreement signed by ECOWAS and WTO.

    Also speaking, the Chief Technical Advisor to the United Nations Industrial Development Organisation (UNIDO), Mr. Charles Malata, said in the past there were no boundaries in Africa, and that the only limitation was the quality of products.

    He said UNIDO is working on the National Quality Infrastructure Project for Nigeria to promote quality businesses and break barriers to businesses on the continent.

    Mr. Malata said quality and standard should be the baseline for moving products in Africa, as it would help in building trust. The UNIDO Technical Advisor added that no West African country should cry foul of domination by products from another West African country. Rather, they should strive to improve their own standards and invest in commodities they have comparative advantage.

    “As a country, one has to take a strategic decision by investing in where it has comparative advantage,” he said, calling on investors from Africa to strive to build trust in their businesses. He also stated that all barriers to regional and international trade must be removed for the continent to join the rest of the world in development and globalisation.

  • BoI reaffirms commitment to real sector financing

    BoI reaffirms commitment to real sector financing

    Bank of Industry (BoI) has reaffirmed its commitment to supporting to Small and Medium Enterprises (SMEs) through sustainable funding schemes that would further stimulate industrialisation.

    BoI Managing Director Rasheed Olaoluwa made this known in Lagos, at the weekend, when it joined other nations to commemorate this year’s African Industrialisation Day.

    The Africa Industrialisation Day is celebrated on November 20 each year to assist governments and other organisations in many African countries examine ways to stimulate industrialisation, while drawing attention to its challenges in the continent.

    This year’s African Industrialisation Day had the theme: “SMEs for poverty Eradication and Job Creation for Women and Youth”.

    United Nations Secretary-General Ban Ki-Moon had stated that many African economies had shown impressive growth rates in recent years, but increased prosperity had not always translated into inclusive wealth creation.

    According to him, far too often, economic development depends on the extraction of natural resources and  low-skilled labour.

    He noted that, “Africa needs a green, clean industrialisation that leapfrogs out-dated, polluting processes and platforms and benefits from new technologies. Inclusive and sustainable industrialisation is a key stepping stone towards sustained economic growth, food security and poverty eradication in Africa.”

    Olaoluwa said the bank, as part of measures to ensure its impact is felt in the economy, developed a five-year Strategic Plan from 2015-2019 to address challenges with funding the nation’s industrial-isation agenda.

    According to him, the strategic initiative has seen the bank move from the introduction of several innovative financing schemes to the appointment of 122 Business Development Service Providers (BDSPs) to facilitate SMEs’ access to loans as well as the reduction of non-performing loans from 18 per cent to less than five per cent.

    Noting that BoI has been improving SMEs’ operational efficiency with an upgrade of its system and introduction of mobile applications, Olaoluwa stressed that the developments imply that Nigeria must join the rest of the world to become an industrialised nation by harnessing the potential in various sectors while engaging youths to become entrepreneurs.

    His words: “BoI is trying to achieve a balance in its functions as a development finance institution in terms of  delivering social impact and maintaining a sustainable economic development. An innovative approach is required to tackle this social malaise of graduate unemployment that has engulfed the country.”

    He explained that the BoI’s recent ‘Graduate Entrepreneurship Fund’ strategy was to identify the innate talents of these young graduates as soon as they leave school, build their capacities for self-reliance. It was also intended to empower them to establish their own businesses, thereby creating jobs not just for themselves, but also for other youths that they may employ.

    “We are confident that key shareholders  in the National Industrial Revolution Plan (NIRP) initiative like the Ministry of Finance Incorporated and the Central Bank of Nigeria (CBN) will continue to support the bank with some equity injection. But considering the fact that there is a lot of demand on government’s resources, we are exploring alternative modes of funding such as continuation of sector specific intervention funds by the CBN, Ministry of Agriculture, Solid Minerals and others,” Olaoluwa said.

    He added that the bank was looking at managed funds from various state governments and foundations; including long-term loans at very low interest rates from multi lateral/international development institutions.

    With operational efficiency serving as a key benchmark, Olaoluwa said the bank is automating a lot of its processes to give SMEs the opportunity to be served better.

  • Enforce COT regulations, expert urges CBN

    Enforce COT regulations, expert urges CBN

    Central Bank of Nigeria (CBN) Governor Godwin Emefiele has been advised to enforce the directive to banks to reduce Commission on Turnover (COT), as it is threatening Small and Medium Scale Enterprises (SMEs).

    Making the call in Lagos, lastweek, Chairman of Builders’ Mart, a provider of building equipment and homes solutions, Mr. Ayobami Biobaku, said the CBN had not been able to enforce the COT rule it set in 2013. He said CBN’s inaction gave the impression that it had decided to look the other way while the banks engaged in all forms of unapproved practices as well as collect spurious charges.

    He therefore, urged the CBN to check the banks on COT charged so as not to cripple the SMEs. According to him, COT was “like cancer that is slowly and silently killing SMEs.”

    The controversial COT is a charge levied on customer withdrawals by banks, and it is calculated at the end of every month, applying the percentage on a customer’s aggregate withdrawals from the first day of the month to the last day of the month.

    Worried by the harmful effect of COT on SMEs particularly, the CBN in 2013 met with the Bankers’ Committee to find lasting solution to the issue and the result was the production of a special guide on bank charges that both parties endorsed. However, up till date that agreement has not been enforced by the CBN.

    Biobaku said no  bank had heeded the CBN’s instruction to refund money collected from depositors since 2013 and that they were still being charged by banks in violation of CBN’s directive. He urged the CBN Governor to come to their rescue because they are losing a lot of money that should improve their business to the banks.

  • Spate of regulatory sanctions worries LCCI

    Spate of regulatory sanctions worries LCCI

    • Chamber calls for restraint 

    The Lagos Chamber of Commerce and Industry (LCCI) is worried over the spate of regulatory sanctions in recent times, saying the penalties are severe, arbitrary and disproportionate.

    In a document signed by its President, Mr. Remi Bello, and made available to The Nation, Bello said while the LCCI would not support impunity under whatever guise, it would desire that the activities of regulatory institutions are in consonance with best regulatory practice.

    He identified the recent sanctions of N1.4 trillion fine imposed on MTN by the Nigerian Communications Commission (NCC) because of non-registration of SIM cards; and N1 billion administrative charge imposed on Guinness by the National Agency for Food, Drug Administration and Control (NAFDAC).

    Others are the N4 billion penalty imposed by the Central Bank of Nigeria (CBN) on Skye Bank; penalty on FirstBank to the tune of  N1.9 billion and N2.9 billion imposed on UBA by the CBN.

    LCCI argued that “sanctions should be proportionate and corrective. It should not be of such magnitude as to impose a shock from which recovery by firms may either be difficult or impossible. There should also be a clear framework and guidelines for the imposition of sanctions or penalties.”

    Bello canvassed the defining of the limits of regulatory discretional powers. He said the chamber took this position to check the abuse of power by regulatory agencies to avoid high-handedness and intimidating disposition which would not augur well for an economy that needs to attract investment.

    “Already, the perception and ranking of Nigeria as an investment destination is unsatisfactory. For instance, Nigeria ranks 169 out of 189 countries profiled in the World Bank Ease of Doing Business Report for 2015.

    “It also has a ranking of 124 out of 140 countries profiled in the global competitiveness report of the World Economic Forum. The regulatory environment is a critical factor in this ranking performance of Nigeria”, Bello added.

  • Economic policies: Sosan counsels entrepreneurs

    Economic policies: Sosan counsels entrepreneurs

    Former Lagos State Deputy Governor  Sarah Sosan has called on entrepreneurs and Small and Medium Enterprises (SMEs) to search for innovative ways of adapting their businesses and organisations to government policies no matter how unfriendly they seem.

    She said no government will intentionally hurt the growth of businesses in the name of policies, urging entrepreneurs to be on top of their game and apply themselves to the rules governing business operations.

    Speaking to The Nation in Lagos, she said although, the recent Central Bank of Nigeria (CBN) Foreign Exchange (forex) policy that eliminated importers of 41 items from accessing forex through CBN window may on the face value seem inimical to the manufacturing sector due to attacks on the policy by members of the oraganised private sector, the policy is for the overall well-being of the economy.

    According to her, government, through the policy, seeks to protect local manufacturers against unhealthy competition from imported goods. She insisted that the end of the current economic pain will justify the means, which will ultimately grow local capacity and encourage value addition in the manufacturing process.

    Sosan, however, decried the free fall of the naira against the United States dollar. She, therefore, threw her weight behind every effort of government to shore up the value of the naira.

    The former deputy governor urged government to step up efforts on job creation, insisting that engaging the youth remains the panacea to restiveness and security challenges facing the country.

    Speaking on the success of the just concluded International Trade Fair organised by the Lagos Chamber of Commerce and Industry (LCCI) and the increased interest by overseas participants, Mrs. Sosan said the heightened interest in the fair may be attributed to the renewed confidence on the economy.

    The just-concluded fair with the theme: “Enhancing Value Addition in the Non-oil Economy”, China, Egypt, Japan, Ghana, India, European Union, Indonesia and Pakistan, with an average of 500,000 visitors daily.

    Sosan stressed that what the economy lost in the 2014 fair as a result of the outbreak of Ebola virus that discouraged exhibitors from Europe and Asia was recovered this year with the huge presence of exhibitors from overseas countries with products and services that will impact positively on the economy.

    She said the current administration has brought in sterling qualities in the management of the economy with fiscal and monetary reforms poised at driving economic growth. She expressed optimism that the new ministers will drive policies that will encourage local entrepreneurs, the non-oil economy and export trade.